Save Article

Calpers Gets Schooled

A judge says public pensions can be impaired as part of bankruptcy.

Feb. 8, 2015 6:43 p.m. ET

Federal judges tend to be impatient with bullies. Behold judge Christopher Klein’s opinion last week confirming the city of Stockton’s bankruptcy exit plan, which is as incisive in its rebuke of the California Public Employees’ Retirement System (Calpers) as it is instructive about U.S. bankruptcy law.

Stockton declared Chapter 9 bankruptcy in 2012, and it has since rewritten labor contracts and asked creditors for writedowns. Yet after being browbeaten by Calpers, the giant public-pension fund, the city held pensions harmless....